V3 * " c- .
m
Conservative.
ress adopted and followed by th most
energetic , instead of standing still and
crying for the government to como to
their rescue.
The main purpose of this article is to
show how one trust decreased prices.
The discovery of
on
petroleum by bor
ing through rock strata was made in
1859. As it was soon obtained in large
quantities , the question of its utilization
and of finding a market for its products
became at once important. A great
many manufactories were erected for
refining the crude article ; but for many
years the product was poor and danger
ous , and the enterprises wore not finan
cially successful. A few persons who
afterward became well known in the
trade as Standard Oil men entered into
partnership and erected a refinery at
Cleveland. It was not until Januarv.
1870. that their business became suffi
ciently important to justify the forma
tion of a corporation for the purpose of
carrying it on. They then organized
The Standard Oil Company , with a
capital of $1,000 000. This company
continues to manufacture petroleum
products at Cleveland , its capital now
being $8 500 000. But the business in
which these persons were interested
could not bo confined to the city of
Cleveland. That city was west of the
base of supplies , and still further west
of the principal market for domestic
trade and the points of shipment for the
export trade. Cleveland had some ad
vantages in facilities for railway and
water shipment to counteract its natural
disadvantages. But to hold and increase
their trade , these men early saw that
more than a local business must bo done.
The supply of petroleum came from
. ; .
„ * Pennsylvania , and in that state it was
essential that corporate agencies should
be established. They allied themselves
with other persons engaged there in the
same industry , and either organized
corporations or purchased the stocks of
corporations already organized , in order
to carry on business in that state through
corporate agencies.
A Standard Oil Company was organ
ized in Pittsburg for the panie purposes
as the one organ-
History. , . _ , , ,
' ized in Cleveland ,
- /
and the stocks of these two companies
were eventually owned by the same
persons. These individuals thereafter
continued actively , individually as well
as through the agency of several cor
porations , to extend and increase their
petroleum business. Thpy established
agencies in different states for the sale
of their products , and when the business
of punh agencies became of sufficient
importance to warrant it , they organ
ized corporations under the laws of the
proper states in order that the industry
might be carried on under corporate
agencies. They located manufactories
at the seaboard for the export trade ,
which rapidly became enormous. They
began the manufacture of crude mater
ials , barrels , cans , paints , glue , acids ,
etc. , necessary in their business , and in
some cases organized corporations for
the purpose of such manufacture. The >
became particularly interested in the
matter of transportation , and the stockholders -
holders of the various companies , as
individuals , constructed pipe lines for
carrying petroleum to the seaboard at.
the expense of millions of dollars , and
ln > ld their interest as partners until cor
porations were established. It was the
aim of these men to open markets for
American petroleum. In order to intro
duce it into home and foreign markets ,
their energies and capital were directed
to the making of pafo and efficient illu
minating oils and to the cheapening of
HIM manufacture not only of the prod
ucts of petroleum , but also of all the
materials used in its manufacture and
transportation.
On the 2d day of January , 1882 , the
number of persons thus associated in
carrying on the oil business in its differ
ent branches through the agency of
corporations organized by themselves
for that purpose was forty. They
owned the entire capital of fifteen cor
porations and part of the stocks of a.
number of others , the latter being
principally small companies engaged
only in trading in oil. Of the stocks
thus held , nine persons owned a major
ity , and in consequence could cast the
controlling vote in each corporation.
These persons entered into an agree
ment by which all their stocks were
placed in the hands of the nine persons
owning the majority as trustees. The
trustees issued certificates showing the
extent of each person's interest in the
stock so surrendered , and agreed to
endeavor to have the business of the
several corporations conducted for the
best interests of all concerned.
It will readily be seen that this trust
did not unite competing corporations ,
for the corporations were largely organ
ized as contributory agencies for the
same business. The stocks were owned
by persons who had long been united in
building up and carrying on this busi
ness , and the voting power was then
held , and continued to be held until the
dissolution of the trust on March 21 ,
1892 , by the persons named as trustees
by right of absolute ownership of a
majority of the stocks. One effect of
this trust is apparent in the fact that
during the ten years of its existence the
number of persons holding its certificates
increased from forty to two thousand.
Every clerk , agent , and employee in
the various corporations who could pave
a few iundred dollars purchased trust
certificates , and thus became interested
in the business and profits. If it is de
sirable to multiply the number who
enjoy the profits of production , how
bettor can it be done than through
ownerchip of stocks in industrial asso
ciations ? The problem of profit-sharing
can aud will bo solved in tins way.
Hundreds and thousands of employees
and persons of small capital are by this
means participating in the profits of the
great , iudnptries of our land.
Until J872 but little progress had been
made in the oil business ; the methods of
transportation aud manufacture were
expensive , and the producb poor even at
the high pricts obtained. The business
of refining was not financially success
ful. It was about , that time that the
men in control of the Standard Oil
Company began to enlarge their busi-
ii' ss , to enter into association with re
finers at other places , and to use the
greater capital , experience , and instrumentalities -
mentalities thus obtained in improving
and cheapening the methods of manu
facture , the quality and cost of the
products , the system of transportation ,
and in opening markets in foreign
countries. The effect upon the business
was soon apparent. In 1872 refined oil
at wholesale averaged 28 5 cents per
gallon. The output was about 248.000-
000 gallons , and the value of the exports
at that price $54.000.000. The improve
ment in production and price from that
date has been gradual and innrked. In
1800 the output was 18,027000000 gallons
lens , the average price 7.3 cents per
gallon , and the value of exports at that
low figure $51,500,000. The reduction
in price between 1872 and 1891 was
10 2 cents per gallon , which shows § 215-
000 000 per year paved to the public by
reduction of price. Crude petroleum
avernged $4 00 per barrel of 42 gallons
in 1872 and SJO 87 p r barrel in 1890 ; so
that $ ! )9 ) 000 000 of this annual saving is
attributable solely to the reduction in
the crude product consequent upon its
enormous production. The remaining
§ Ilfi OOu.OOO per annum of saving is the
result solely of cheapening the price of
the manufactured products.
This reduction has been accomplished
in various ways. At first oil was bar
relled and transported from the wells'
to the refineries or railroads in wagons
and then by rail to the seaboard. The
system of transporting by pipe lines
was introduced prior to 1872 , but it was
expensive aud inefficient. The Stand
ard interest systematized and enlarged
the local system and continued the
lines to the principal cities of the sea
board. Thousands of tanks were erected
to hold the surplus production , and as
much as lf > 00,000.000 gallons of surplus
oil have been stored in these tanks at
one time. Pipe lines have been built to
New York , Philadelphia. Baltimore ,
Buffalo , Pittsburg , Cleveland and Chicago
cage , and a network of feeding lines
reaches from the wells to connect with
the main lines. If these lines were laid
continuously , they would encircle the
globe. When the producer of oil puts
down a well , he notifies the pipe-line
company , and immediately a pipe line
is liiid to connect with his well. The
oil is taken from the tank at the well ,